BREAKING: Congress Does Something--Pushes $127 Billion in Tax Breaks

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In a clear sign that Congress remains light years away from tax reform, the Senate Finance Committee on Thursday approved a bill to renew a grab-bag of tax provisions and loopholes that cost the Treasury billions of dollars annually and help a wide array of special interests, businesses and families.

The tax breaks and credits cover not only corporate research and development, alternative and renewable energy and mass transit, but also major corporate land transactions, movie and TV production, NASCAR track operations and race horse owners.

These dozens of tax credits have never been permanent in the federal tax code, but instead have been repeatedly granted temporary extension over the years, which is why they’re known on Capitol Hill as “tax extenders.”

Sen. Ron Wyden (D-OR), the new chairman of the Finance Committee, had signaled recently that he wasn’t going to tolerate business as usual, and was determined to scale back some of these expiring provisions to save the government money. By the time the dust settled yesterday, however, the committee had reauthorized all of the existing tax breaks – and threw in a few new ones for good measure. Members did it by voice vote, so that their names were not directly linked to this massive tax giveaway.

The two year price tag of the package is roughly $127 billion in lost revenue.

“Talk about taking wind out the tax reform sails,” said Steve Ellis of Taxpayers for Common Sense, a government spending watchdog group. “Speaking of which, the wind production tax credit got added back. This is a very inauspicious start to comprehensive tax reform in the new Chairman Wyden era.”

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, added her voice of disappointment to the tax reform backtracking by Wyden and the committee:

"There is a tremendous amount of time, energy and money going into protecting special tax breaks with very little attention to paying for the costs,” she said in a statement. “What this country should be doing is overhauling the disaster of a tax code to make us more competitive, grow the economy and reduce the debt. Instead we are seeing Washington at its very worst as special interests and members of Congress run to protect their favorite tax breaks."

Wyden found himself on the defensive and promised that this would be the last time these provisions were reauthorized without a major rewrite in the tax code.

“By passing this bill, the Finance Committee has put an expiration date on the status quo,” he said. “The stop and go nature of these tax extenders contributes to the lack of certainty and predictability…. But it makes no sense to let these incentives disappear without a comprehensive reform proposal to replace them when jobs, innovation and research, and people's homes are on the line.”

The next stop for the extenders is the Senate floor, where members will have to go on record next week for or against the multi-billion-dollar tax package. Assuming the bill is approved, it then goes to the House, where Ways and Means Committee Chairman Dave Camp (R-MI) is trying to push through genuine comprehensive tax reform before he retires at the end of the year.

So what’s in the Senate Finance Committee package? Here are many of the two-year provisions, as compiled by Taxpayers for Common Sense:

Tax Credits for research and experimentation. Companies that have benefited from this provision include Microsoft Corp., Boeing Co., United Technologies Corp., Electronic Data Systems Corp. and Harley-Davidson. Estimated cost: $6 billion over two years.

Tax break for reducing mortgage debt on a principal residence. Estimated cost: $3.48 billion over two years.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.